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Transerv’s strategy for scaling up a digital payments venture

Nirvana Venture and Faering Capital-backed TranServ, a digital payments company with over eight million customers on its platform, recently tied up with Micromax, which will help it redefine mobile payments for Micromax users and reach new customer segments across the country.

Anish Williams, an erstwhile banker, understands the nitty-grittys of the fintech space as he began his career with Citibank in Chennai. During his stint in Citibank, where he was responsible for developing and managing payment products, he realised that the pillar for the payments business is technology. He says, “Technology has to be measurable and a company needs to identify trends and respond to it.” Although this segment is small at present, Williams expects it to grow in the coming years, however, he adds that there is more work to be done as the industry moves from being a cash economy to a transaction economy. Given the opportunity and his experience in the banking sector, Williams along with Aditya Gupta, established TranServ, a digital payments company, in 2010. TranServ targets individuals and business partners and specialises in end-to-end payment programme management solutions that aid cash-free transactions.

With a team size of 180, TranServ is a capital-light company and is not driven by discounting. Currently, it has eight million customers on its platform, over 6,000 merchants and corporates and has close to 80,000 cash loading points plugged in to its platform. The company’s revenue has grown by 10 per cent month-on-month which can be attributed to its conservative spending pattern apart from a growing market.

The thing with payments is that, people don’t say ‘i am going to start making the payment today’. The motivation is the actual buying. That is why transerv never went over the line in its marketing efforts and stuck to a below-the-line strategy with a keen focus on its user segments.

Backed by investors such as Nirvana Venture Advisors, Faering Capital, IDFC Mutual Funds and Micromax, the company recently raised its Series-C round to the tune of Rs. 200 crore. These funds will be used towards enhancing TranServ’s current product lines, accelerating business growth and investing in new product lines including micro credit. Its banking partner is Ratnakar bank, which sponsors the card issuance programme through TranServ’s platform.

Creating a wallet

There are multiple stakeholders such as individuals, merchant partners and corporates, who want to engage with their employers, suppliers and vendors and digitise their transactions. So, when TranServ was incorporated, the founding team built a flexible layer of API for any stakeholder to deliver a payment. Many merchant partners and corporates use the company’s API stack to scale, collect and disburse payments to individual customers, employees, vendors or suppliers, in an efficient manner. “While a salary transfer by a corporate happens through a scheduled salary bank account, there are other small value transactions like fuel reimbursement, meal coupons and medical coupons that take place as well,” observes Williams.

TranServ’s Udio mobile wallet comes with a facility of a physical prepaid Visa card that can be used for payments both online and offline. This is a platform of choice for person-to-person transactions, including social gifting, splitting bills, voucher gifting, data gifting and group payments. It has received 5,00,000 downloads in a span of just one month.

The company is also now focussing on bringing the offline money transacting audience (retail stores) that deals with hard cash to a digital medium.

Overcoming initial challenges

Setting up the best team given available resources was one of the key challenges TranServ faced. When the company was setting up its team during 2011 and 2012, there were other companies with large capital investment who were also hiring. “Due to capital spends by a lot of companies, cost of talent just got more expensive and as a result, it was hard to get the right talent at the right price. The market got a little distorted,” says Williams candidly.

Another challenge it faced was the squeeze in its margins. “If you look at the pure payments space, when we started out, there was a large opportunity in a country like India. There were many companies that started to take interesting positions and spent of a lot of capital on businesses. It started squeezing our margins,” he recalls. In that environment the company focused on bringing value to its partners while simultaneously holding on to its margins without taking the discounting route.

Due to capital spends by a lot of companies, cost of talent just got more expensive and as a result, it was hard to get the right talent at the right price.

Planning its future

“The problem with payment is that, people don’t say ‘I am going to start making the payment today’. The motivation is the actual buying,” points out Williams. That is why TranServ never went over the line in its marketing efforts and stuck to a below-the-line strategy with a keen focus on its user segments.

However, it keeps a watch over its consumer trends and responds to it through its innovative ideas. “There is a large chunk of consumers who transact in cash and it is out of compulsion as they get paid in cash,” says William. The company is trying to create a new space for people to digitise this cash through its partnership with Micromax. “There are over 80,000 distribution points where people can provide cash and do a digital transaction,” says Williams.

This service comes with a Visa card to enable payments in the consumer to merchant world as well. The new Micromax devices will come with the integrated payment solution in the devices and the Visa card in a box. Users will be able to add cash to their wallets from credit/debit cards, net banking or even using cash at a Micromax store. William explains, “The person who wants to do the transaction can deposit money there. Once this gets deposited, it becomes available digitally in the Micromax phone and the app there shows the balance and other transaction details.” He continues, “If you go to the Micromax phone, in the contact list, apart from calling option, there is also a transact option.” The Micromax payment layer will come with an offline element too courtesy the physical card. This also gives the company access to a large number of customers (Tiers I,II,III) every month.

With this strategy to scale in place, the company is set to capitalise on this evolving market, by building value in this diverse payment ecosystem. “To achieve that, we would like to create a sticky base of consumers who use the platform and increase our transaction volume,” says Williams, on a concluding note.

Safety and security of transactions in the digital market

Prevent intruders from entering the system and have advanced levels of firewalls

Avoid fraudulent transactions. For this, the company needs to continually look at data on the transaction platform and have different risk categories for customers based on their behaviour.

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.

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